Exhibit 10.2


 


NEITHER THIS SECURITY NOR
THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE
TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES
ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY
SUCH SECURITIES.


 


THE HOLDER AGREES HEREIN
TO SUBORDINATE THE INDEBTEDNESS OWED TO HOLDER UNDER THIS NOTE TO THE COMPANY’S SENIOR LENDER.


 


Original Issue Date: ________ __, 2016


Original Conversion Price (subject to adjustment
herein): $


 


$_______________


 


12%
SUBORDINATED CONVERTIBLE NOTE


DUE
December 31, 2018


 


THIS 12% SUBORDINATED CONVERTIBLE
NOTE is one of a series of duly authorized and validly issued 12% Subordinated Convertible Notes of Intellinetics, Inc., a Nevada
corporation, (the “Company”), having its principal place of business at 2190 Dividend Drive, Columbus, OH 43228,
designated as its 12% Subordinated Convertible Note due December 31, 2018 (this Note, the “Note” and, collectively
with the other Notes of such series, the “Notes”).


 


FOR VALUE RECEIVED, the
Company promises to pay to ________________________ or its registered assigns (the “Holder”), or shall have
paid pursuant to the terms hereunder, the principal sum of $_______________ on December 31, 2018 (the “Maturity Date”)
or such earlier date as this Note is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder
on the aggregate unconverted and then outstanding principal amount of this Note in accordance with the provisions hereof. This
Note is subject to the following additional provisions:


 


Section 1.       Definitions.
For the purposes hereof, in addition to the terms defined elsewhere in this Note, (a) capitalized terms not otherwise defined
herein shall have the meanings set forth in the Purchase Agreement and (b) the following terms shall have the following meanings:


 




    	 	1	 



     


    

 


“Bankruptcy
Event” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule
1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment
of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or
any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof any such case
or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary thereof is
adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the
Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part
of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant
Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof
calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g) the Company
or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence
in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.


 


“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to
close.


 


“Buy-In”
shall have the meaning set forth in Section 4(c)(v).


 


“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof
by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of
in excess of 50% of the voting securities of the Company (other than by means of conversion or exercise of the Notes and the Securities
issued together with the Notes), (b) the Company merges into or consolidates with any other Person, or any Person merges into or
consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company immediately prior to
such transaction own less than 66% of the aggregate voting power of the Company or the successor entity of such transaction, (c)
the Company sells or transfers all or substantially all of its assets to another Person and the stockholders of the Company immediately
prior to such transaction own less than 66% of the aggregate voting power of the acquiring entity immediately after the transaction,
(d) a replacement at one time or within a three year period of more than one-half of the members of the Board of Directors which
is not approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by
those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was
approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the execution by the
Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in clauses
(a) through (d) above.


 




    	 	2	 



     


    

 


“Conversion”
shall have the meaning ascribed to such term in Section 4.


 


“Conversion
Date” shall have the meaning set forth in Section 4(a).


 


“Conversion
Price” shall have the meaning set forth in Section 4(b).


 


“Conversion
Schedule” means the Conversion Schedule in the form of Schedule 1 attached hereto.


 


“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Note in accordance with the
terms hereof.


 


“Deferred
Interest Amount” shall have the meaning set forth in Section 2(a).


 


“Effective
Date” means the date when a Registration Statement has been declared effective by the SEC.


 


“Equity
Conditions” means, during the period in question, (a) the Company shall have
duly honored all conversions and redemptions required to have been effected by virtue of one or more valid Notices of Conversion
of the Holder, if any, (b)(i) there is an effective Registration Statement pursuant to which the Holder is permitted to
utilize the prospectus thereunder to resell all of the shares of Common Stock issuable pursuant to the Notes (and the Company
believes, in good faith, that such effectiveness will continue uninterrupted for the foreseeable future) or (ii) all of the Conversion
Shares issuable pursuant to the Notes, may be resold pursuant to Rule 144 without volume or manner-of-sale restrictions and the
Company is in compliance with any applicable current public information requirements as determined by the counsel to the Company
as set forth in a written opinion letter to such effect, addressed and acceptable to the Transfer Agent and the Holder (and the
Company believes, in good faith, that such compliance will continue uninterrupted for the foreseeable future), (c) the Common
Stock is trading on a Trading Market and all of the shares issuable pursuant to the Notes are listed or quoted for trading on
such Trading Market, (d) there is a sufficient number of authorized but unissued and otherwise unreserved shares of Common Stock
for the issuance of all of the shares then issuable upon conversion of the Notes contemplated to be converted, (e) there is no
existing Event of Default and no existing event which, with the passage of time or the giving of notice, would constitute an Event
of Default, (f) the issuance of the shares in question to the Holder would not violate the limitations set forth in Section 4(d)
herein, (g) there has been no public announcement of a pending or proposed Fundamental
Transaction or Change of Control Transaction that has not been consummated, and (h) the applicable Holder is not in possession
of any information provided by the Company that constitutes, or may constitute, material non-public information.


 




    	 	3	 



     


    

 


 


“Event
of Default” shall have the meaning set forth in Section 8(a).


 


“Forced
Conversion” shall have the meaning set forth in Section 6.


 


“Forced
Conversion Date” shall have the meaning set forth in Section 6.


 


“Forced
Conversion Notice” shall have the meaning set forth in Section 6.


 


“Forced
Conversion Notice Date” shall have the meaning set forth in Section 6.


 


“Fundamental
Transaction” means one of the following: (i) the Company, directly or indirectly, in one or more related transactions
effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects
any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one
or a series of related transactions (excluding specifically the license or other disposition of the Company’s intellectual
property in the ordinary course of business), (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether
by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common
Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization
or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted
into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions
consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group
acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person
or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business combination).


 


“Interest
Notice Period” shall have the meaning set forth in Section 2(b).


 


“Interest
Payment Date” shall have the meaning set forth in Section 2(a).


 


“Late
Fees” shall have the meaning set forth in Section 2(d).


 




    	 	4	 



     


    

 


“Mandatory
Default Amount” means the sum of (a) 120% of the outstanding principal amount of this Note, plus 100% of accrued and
unpaid interest hereon, and (b) all other amounts, costs, expenses and liquidated damages due in respect of this Note.


 


“New
York Courts” shall have the meaning set forth in Section 9(d).


 


“Note
Register” shall have the meaning set forth in Section 2(c).


 


“Notice
of Conversion” shall have the meaning set forth in Section 4(a).


 


“Original
Issue Date” means the date of the first issuance of the Notes, regardless of any transfers of any Note and regardless
of the number of instruments which may be issued to evidence such Notes.


 


“Permitted
Indebtedness” means (a) the indebtedness evidenced by the Notes, (b) (i) the indebtedness existing on the Original Issue
Date; and (ii) without duplication, indebtedness from time to time due and owing to Senior Lender, whether existing on the Original
Issue Date or incurred by the Company at any time thereafter, (c) lease obligations and purchase money indebtedness incurred in
connection with the acquisition of capital assets and lease obligations with respect to newly acquired or leased assets, (d) other
indebtedness, not to exceed, in the aggregate, $250,000, which is not covered pursuant to the foregoing clauses (a) – (c),
or (e) indebtedness incurred in connection with a credit facility by a nationally or state chartered bank in an amount not less
than $1,000,000.


 


“Permitted
Lien” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental
charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good
faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company)
have been established in accordance with GAAP, (b) Liens imposed by law which were incurred in the ordinary course of the Company’s
business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other
similar Liens arising in the ordinary course of the Company’s business, and which (x) do not individually or in the aggregate
materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business
of the Company and its consolidated Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien,
(c) Liens incurred in connection with Permitted Indebtedness under clauses (a) and (b) thereunder, and (d) Liens incurred in connection
with Permitted Indebtedness under clause (c) thereunder, provided that such Liens are not secured by assets of the Company or its
Subsidiaries other than the assets so acquired or leased, or cash collateral existing in a collateral account on the date hereof
and identified as restricted cash on the Company’s balance sheet.


 




    	 	5	 



     


    

 


“Purchase
Agreement” means the Note Purchase Agreement, dated as of December ___, 2016 among the Company and the original Holders,
as amended, modified or supplemented from time to time in accordance with its terms.


 


“Registration
Statement” means a registration statement covering the resale of all the Conversion Shares issuable upon conversion of
the outstanding Notes.


 


“Required
Holders” means Holders of at least 60% in principal amount of the then outstanding Notes.


 


“SEC”
means the United States Securities and Exchange Commission.


 


“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.


 


“Senior
Lender” means The Director of Development of the State of Ohio and any of its successors and assigns, or any subsequent
senior lender that provides a credit facility in an amount not less than $1,000,000.


 


“Share
Delivery Date” shall have the meaning set forth in Section 4(c)(ii).


 


“Threshold
Period” shall have the meaning set forth in Section 6.


 


“Trading
Day” means a day on which the principal Trading Market is open for trading.


 


“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New
York Stock Exchange, the OTC Bulletin Board or the OTCQB operated by OTC Markets Group Inc. (or any successors to any of the foregoing).


 


“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if the OTCQB is not a Trading Market, the
volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c)
if the Common Stock is not then listed or quoted for trading on the OTCQB or OTC Bulletin Board and if prices for the Common Stock
are then reported on the OTC “Pinks” operated by the OTC Markets Group Inc. (or a similar organization or agency succeeding
to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all
other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith
by the Required Holders and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.


 




    	 	6	 



     


    

 


Section 2.         Interest.


 


a)       Payment
of Interest in Cash. The Company shall pay interest to the Holder on the aggregate unconverted and then outstanding principal
amount of this Note at the rate of 12.0% per annum in the aggregate, subject to adjustment as set forth herein, of which (i) 6.0%
shall be payable quarterly in cash in arrears on the first Trading Day of each fiscal quarter, beginning on April 1, 2017 and on
the Maturity Date (each such date, an “Interest Payment Date”) (if any Interest Payment Date is not a Business
Day, then the applicable payment shall be due on the next succeeding Business Day), and (ii) 6.0% per annum (the “Deferred
Interest Amount”), subject to adjustment as set forth herein, which shall accrue and become due on the Maturity Date.
If any quarterly interest payment is not made by its Interest Payment Date, then the Deferred Interest Amount for such quarterly
interest payment shall increase from 6.0% to 8.0%.


 


b)       Interest
Calculations. Interest on the outstanding principal amount shall be calculated on the basis of a 360-day year, consisting of
twelve 30 calendar day periods, and shall accrue daily commencing on the Original Issue Date until payment or conversion in full
of the outstanding principal, together with all accrued and unpaid interest, liquidated damages and other amounts which may become
due hereunder, has been made. Interest hereunder will be paid to the Person in whose name this Note is registered on the records
of the Company regarding registration and transfers of this Note (the “Note Register”).


 


c)       Late
Fee. All overdue principal and accrued and unpaid interest to be paid hereunder shall entail a late fee at an interest rate
equal to the lesser of 14% per annum or the maximum rate permitted by applicable law (the “Late Fees”) which
shall accrue daily from the date such principal or interest is due hereunder through and including the date of actual payment in
full.


 


d)       Prepayment.
The Company may prepay any portion of the principal amount of this Note without the prior written consent of the Holder, provided,
however, that (i) any prepayment is done on a pro rata basis on all Notes then outstanding and (ii) if the Company prepays any
principal on or before the first anniversary of the Original Issue Date, the Company shall pay a premium equal to 10% of the amount
of principal of this Note being prepaid.


 




    	 	7	 



     


    

 


Section 3.         Registration
of Transfers and Exchanges.


 


a)       Different
Denominations. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations,
as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.


 


b)       Investment
Representations. This Note has been issued subject to certain investment representations of the original Holder set forth in
the Purchase Agreement and may be transferred or exchanged only in compliance with applicable federal and state securities laws
and regulations.


 


c)       Reliance
on Note Register. Prior to due presentment for transfer to the Company of this Note, the Company and any agent of the Company
may treat the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither the Company nor any such
agent shall be affected by notice to the contrary.


 


Section 4.         Conversion.


 


a)       Voluntary
Conversion. At any time after the Original Issue Date until this Note is no longer outstanding, this Note and accrued interest
thereon shall be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from
time to time (subject to the conversion limitations set forth in Section 4(d)). The Holder shall effect conversions by delivering
to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice of Conversion”),
specifying therein the principal amount of this Note to be converted and the date on which such conversion shall be effected (such
date, the “Conversion Date”). The Conversion Date shall be no earlier than the date that such Notice of Conversion
is deemed delivered hereunder. If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date
that such Notice of Conversion is deemed delivered hereunder. To effect conversions hereunder, the Holder shall not be required
to physically surrender this Note to the Company unless the entire principal amount of this Note, plus all accrued and unpaid interest
thereon, has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this
Note in an amount equal to the applicable conversion. The Company may deliver an objection to any Notice of Conversion within one
(1) Business Day of delivery of such Notice of Conversion. Following delivery of the Notice of Conversion to the Company, the Company
shall promptly update the Conversion Schedule (showing the principal amount(s) converted and the date of such conversion(s)) and
deliver the same to the Holder. In the event of any dispute or discrepancy, the records of the Holder shall be controlling and
determinative in the absence of manifest error. The Holder, and any assignee by acceptance of this Note, acknowledge and agree
that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted
principal amount of this Note may be less than the amount stated on the face hereof.


 




    	 	8	 



     


    

 


b)       Conversion
Price. The conversion price in effect on any Conversion Date shall be equal to $0.65, subject to adjustment herein (the
“Conversion Price”).


 


 c)       Mechanics of Conversion.




 


i.       Conversion
Shares Issuable Upon Conversion of Principal Amount. The number of Conversion Shares issuable upon a conversion hereunder shall
be determined by the quotient obtained by dividing (x) the sum of the outstanding principal amount plus all accrued, unpaid interest
of this Note to be converted by (y) the Conversion Price.


 


ii.       Delivery
of Certificate Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share Delivery
Date”), the Company shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing
the Conversion Shares which, on or after the earlier of (i) the one-year anniversary of the Original Issue Date (if the Holder
is not an Affiliate of the Company and has not been an Affiliate during the preceding three (3) months) or (ii) the Effective Date,
shall be free of restrictive legends and trading restrictions (other than those which may then be required by the Purchase Agreement)
representing the number of Conversion Shares being acquired upon the conversion of this Note. On or after the earlier of (i) the
one year anniversary of the Original Issue Date or (ii) the Effective Date, the Company shall use its best efforts to deliver any
certificate or certificates required to be delivered by the Company under this Section 4(c) electronically through the Depository
Trust Company or another established clearing corporation performing similar functions.


 


iii.       Failure
to Deliver Certificates. If, in the case of any Notice of Conversion, such certificate or certificates are not delivered to
or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to
the Company at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in which event
the Company shall promptly return to the Holder any original Note delivered to the Company and the Holder shall promptly return
to the Company the Common Stock certificates issued to such Holder pursuant to the rescinded Conversion Notice.


 




    	 	9	 



     


    

 


iv.       Obligation
Absolute. The Company’s obligations to issue and deliver the Conversion Shares upon conversion of this Note in accordance
with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same,
any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce
the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or
any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person,
and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection
with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver
by the Company of any such action the Company may have against the Holder. In the event the Holder of this Note shall elect to
convert any or all of the outstanding principal amount hereof, the Company may not refuse conversion based on any claim that the
Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law, agreement or for any other
reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion of all or part of this
Note shall have been sought and obtained, and the Company posts a surety bond for the benefit of the Holder in the amount of 150%
of the outstanding principal amount of this Note, which is subject to the injunction, which bond shall remain in effect until the
completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to the Holder to the
extent it obtains judgment. In the absence of such injunction, the Company shall issue Conversion Shares or, if applicable, cash,
upon a properly noticed conversion. The Holder shall have the right to pursue actual damages or declare an Event of Default pursuant
to Section 8 hereof for the Company’s failure to deliver Conversion Shares within the period specified herein and the Holder
shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree
of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to
enforce damages pursuant to any other Section hereof or under applicable law.


 


v.       Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available to the Holder,
if the Company fails for any reason to deliver to the Holder such certificate or certificates by the Share Delivery Date pursuant
to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open
market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion relating
to such Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash to the Holder (in addition
to any other remedies available to or elected by the Holder) the amount, if any, by which (x) the Holder’s total purchase
price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number
of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale
price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B)
at the option of the Holder, either reissue (if surrendered) this Note in a principal amount equal to the principal amount of the
attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder the number of shares of
Common Stock that would have been issued if the Company had timely complied with its delivery requirements under Section 4(c)(ii).
For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an
attempted conversion of this Note with respect to which the actual sale price of the Conversion Shares (including any brokerage
commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence,
the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts
payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein
shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon conversion of this Note as required pursuant to the terms hereof.


 




    	 	10	 



     


    

 


vi.       Reservation
of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized
and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Note, free from preemptive rights
or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Notes), not less
than such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Purchase
Agreement) be issuable (taking into account the adjustments and restrictions of Section 5) upon the conversion of the then outstanding
principal amount of this Note. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue,
be duly authorized, validly issued, fully paid and nonassessable and, if the Registration Statement is then effective under the
Securities Act, shall be registered for public resale in accordance with the rules and regulations of the SEC.


 


vii.       Fractional
Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Note. As to
any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Company shall at its
election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the
Conversion Price or round up to the next whole share.


 


viii.      Transfer
Taxes. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge
to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such
certificates, provided that, the Company shall not be required to pay any tax that may be payable in respect of any transfer involved
in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Note so converted
and the Company shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.


 




    	 	11	 



     


    

 


d)       Beneficial
Ownership Limitation. The Company shall not effect any conversion of this Note, and a Holder shall not have the right to convert
any portion of this Note, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion,
the Holder (together with the Holder’s Affiliates, and any Persons acting as a group together with the Holder or any of
the Holder’s or such Persons’ Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation
(as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the
Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of this Note with respect
to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i)
conversion of the remaining, unconverted principal amount of this Note beneficially owned by the Holder or any of its Affiliates
and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a
limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, any other Notes)
beneficially owned by the Holder or any of its Affiliates.  Except as set forth in the preceding sentence, for purposes of
this Section 4(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. To the extent that the limitation contained in this Section 4(d) applies, the determination
of whether this Note is convertible (in relation to other securities owned by the Holder together with any Affiliates and
any Persons deemed to act as a group together with the Holder and any of the Holder’s or such Person’s Affiliates)
and of which principal amount of this Note is convertible shall be in the sole discretion of the Holder, and the submission of
a Notice of Conversion shall be deemed to be the Holder’s determination of whether this Note may be converted (in relation
to other securities owned by the Holder together with any Affiliates) and which principal amount of this Note is convertible,
in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed
to represent to the Company each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions
set forth in this paragraph and the Company shall have no obligation to verify or confirm the accuracy of such determination.
In addition, a determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 4(d), in determining the number of outstanding shares of Common Stock, the Holder may rely
on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Company’s most
recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by the
Company, or (iii) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of
shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within two Trading Days
confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number
of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the
Company, including this Note, by the Holder or its Affiliates since the date as of which such number of outstanding shares of
Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of
the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion
of this Note held by the Holder. The Holder, upon prior notice to the Company, may increase or decrease the Beneficial Ownership
Limitation provisions of this Section 4(d), provided that the Beneficial Ownership Limitation provisions of this Section 4(d)
shall continue to apply. Any such increase will not be effective until the 61st day after such notice is delivered
to the Company. The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 4(d) to correct this paragraph (or any portion hereof) which
may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The limitations
contained in this paragraph shall apply to a successor holder of this Note.


 




    	 	12	 



     


    

 


Section 5.        Certain Adjustments.


 


a)       Stock
Dividends and Stock Splits. If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any common stock equivalents
(which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of, or payment
of interest on, the Notes), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including
by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event
of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall
be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares
of the Company) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common
Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall become effective immediately
after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision, combination or re-classification.


 


b)       [RESERVED].


 




    	 	13	 



     


    

 


c)       [RESERVED].


 


d)       [RESERVED].


 


e)       [RESERVED].


 


f)       Calculations.
All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall
be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.


 


g)       Notice
to the Holder.


 


i.       Adjustment
to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall
promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement
of the facts requiring such adjustment.


 


ii.       Notice
to Allow Conversion by Holder or Prepayment by the Company. If (A) the Company shall declare a dividend (or any other distribution
in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of
the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe
for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company
shall be required in connection with any Fundamental Transaction or a Change of Control Transaction or (E) the Company shall authorize
the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company
shall cause to be delivered to the Holder at its last address as it shall appear upon the Note Register, at least twenty (20) calendar
days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is
to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights
or warrants are to be determined or (y) the date on which such Fundamental Transaction or Change of Control Transaction is expected
to become effective or close, provided that the failure to deliver such notice or any defect therein or in the delivery thereof
shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided
hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company
shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled
to convert this Note during the 20-day period commencing on the date of such notice except as may otherwise be expressly set forth
herein. In the event that the Holder does not elect to convert this Note into Common Stock prior to the effective date, the Company
may, at its sole election elect to prepay this Note in whole or in part in accordance with Section 2(d), provided, however, to
the extent such action in this Section 5(g)(ii) constitutes an Event of Default, any such repayment of the Note will be governed
in accordance with Section 8(b) hereunder.


 




    	 	14	 



     


    

 


Section 6.        Forced
Conversion. Notwithstanding anything herein to the contrary, if after the Effective Date, the VWAP for any 20 out of 30 consecutive
Trading Days, which period shall have commenced only after the Effective Date (such period the “Threshold Period”),
exceeds $1.63 (subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the Original Issue Date), the Company may, within 5 Trading Days after the end
of any such Threshold Period, deliver a written notice to the Holder (a “Forced Conversion Notice” and the date
such notice is delivered to the Holder, the “Forced Conversion Notice Date”) to cause the Holder to convert
all or part of the then outstanding principal amount of this Note plus accrued but unpaid interest, liquidated damages and other
amounts owing to the Holder under this Note (“Forced Conversion”), it being agreed that the “Conversion
Date” for purposes of Section 4 shall be deemed to occur on the third Trading Day following the Forced Conversion Notice
Date (such third Trading Day, the “Forced Conversion Date”). Any Forced Conversion will be done on a pro rata
basis on all Notes then outstanding. The Company may not deliver a Forced Conversion Notice, and any Forced Conversion Notice delivered
by the Company shall not be effective, unless all of the Equity Conditions are met (unless waived in writing by the Required Holders)
on each Trading Day occurring during the applicable Threshold Period through and including the later of the Forced Conversion Date
and the Trading Day after the date such Conversion Shares pursuant to such conversion are delivered to the Holder. Any Forced Conversion
shall be applied ratably to all Holders based on their initial purchases of Notes pursuant to the Purchase Agreement, provided
that any voluntary conversions by a Holder shall be applied against the Holder’s pro rata allocation, thereby decreasing
the aggregate amount forcibly converted hereunder if only a portion of this Note is forcibly converted. For purposes of clarification,
a Forced Conversion shall be subject to all of the provisions of Section 4, including, without limitation, the limitations on conversions.


 


Section 7.        Negative
Covenants. As long as at least 25% of the original aggregate principal amount of all Notes remains outstanding, unless the
Required Holders (and treating any Notes owned by the Company or any Affiliate of the Company as not outstanding for such purpose)
shall have otherwise given prior written consent, the Company shall not, and shall not permit any of the Subsidiaries to, directly
or indirectly:


 


a)       other
than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money
of any kind, including, but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter
acquired or any interest therein or any income or profits therefrom;


 




    	 	15	 



     


    

 


 


b)       other
than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of
its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;


 


c)       amend
its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially
and adversely affects any rights of the Holder (which limitation shall expressly not apply to any proposal to increase the number
of authorized shares of the Company’s Common Stock);


 


d)       repay,
repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its
Common Stock or common stock equivalents other than as to the Conversion Shares as permitted or required under the Notes;


 


e)       repay,
repurchase or offer to repay, repurchase or otherwise acquire any indebtedness, other than the Notes if on a pro-rata basis, other
than indebtedness due and owing to the Senior Lender and Ray Shealy as in effect as of the Original Issue Date, provided that
such payments shall not be permitted if, at such time, or immediately after giving effect to such payment, any Event of Default
exists or would occur;


 


f)       pay
cash dividends or distributions on any equity securities of the Company;


 


g)       enter
into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing with the Commission,
unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors
of the Company (even if less than a quorum otherwise required for board approval); or


 


h)       enter
into any agreement with respect to any of the foregoing.


 


Section 8.         Events
of Default.


 


a)       “Event
of Default” means, wherever used herein, any of the following events (whatever the reason for such event and whether
such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental body) and
except as shall have been effected with the consent of the Required Holders:


 


i.         any
default in the payment of the principal amount of any Note, which default is not cured within 10 calendar days;


 




    	 	16	 



     


    

 


 


ii.         the
Company shall fail to observe or perform any other covenant or agreement contained in the Notes (other than a breach by the Company
of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause (xi) below)
which failure is not cured, if possible to cure, within the earlier to occur of (A) five (5) Trading Days after notice of such
failure sent by the Holder or by any other Holder to the Company and (B) 10 Trading Days after the Company has become or should
have become aware of such failure;


 


iii.         a
default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument)
shall occur under (A) any of the Notes or (B) any other material agreement, lease, document or instrument to which the Company
or any Subsidiary is obligated (and not covered by clause (vi) below);


 


iv.        any
representation or warranty made in this Note, any other Note, any written statement pursuant hereto or thereto or any other report,
financial statement or certificate made or delivered to the Holder or any other Holder shall be untrue or incorrect in any material
respect as of the date when made or deemed made;


 


v.         the
Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy
Event;


 


vi.        the
Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture
agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced,
any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation
greater than $150,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness
becoming (subject to any applicable cure period) or being declared due and payable prior to the date on which it would otherwise
become due and payable;


 


vii.       the
Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume
listing or quotation for trading thereon within five Trading Days;


 


viii.       the
Company shall be a party to any Change of Control Transaction or Fundamental Transaction or shall agree to sell or dispose of
all or in excess of 50% of its assets in one transaction or a series of related transactions (whether or not such sale would constitute
a Change of Control Transaction) and excluding specifically any license or other disposition
involving continued royalty or similar payments of the Company’s intellectual property assets in the ordinary course of
business);


 




    	 	17	 



     


    

  


ix.        on
or after the 180th calendar day after the Closing Date, the Company does not meet the current public information requirements
under Rule 144 (unless there is an effective Registration Statement in respect of the Conversion Shares);


 


x.         the
Company shall fail for any reason to deliver certificates to a Holder prior to the fifth Trading Day after a Conversion Date pursuant
to Section 4(d) or any Forced Conversion Date pursuant to Section 6(d) or the Company shall provide at any time notice to the Holder,
including by way of public announcement, of the Company’s intention to not honor requests for conversions of any Notes in
accordance with the terms hereof;


 


xi.         the
Company shall materially breach any of the Notes; or


 


xii.        any
monetary judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of their
respective property or other assets for more than $100,000, and such judgment, writ or similar final process shall remain unvacated,
unbonded or unstayed for a period of 45 calendar days.


 


b)       Remedies
Upon Event of Default. If an Event of Default occurs pursuant to Section 8(a)(i), the outstanding principal amount of this
Note, plus accrued but unpaid interest, and other amounts owing in respect thereof through the date of acceleration, shall become,
at the Holder’s election and upon notice thereof to the Company, immediately due and payable in cash at the Mandatory Default
Amount. If an Event of Default occurs pursuant to Sections 8(a)(ii) - 8(a)(xii), the outstanding principal amount of this Note,
plus accrued but unpaid interest, and other amounts owing in respect thereof through the date of acceleration, shall become, at
the Holder’s election and upon notice thereof to the Company, immediately due and payable in cash. Commencing 5 days after
the occurrence of any Event of Default that results in the eventual acceleration of this Note, the interest rate on this Note shall
accrue at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law. Upon the payment
in full of this Note pursuant to this Section 8(b), the Holder shall promptly surrender this Note to or as directed by the Company.
In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment,
demand, protest or other notice of any kind, and the Holder may immediately enforce any and all of its rights and remedies hereunder
and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any time
prior to payment hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder
receives full payment pursuant to this Section 8(b). No such rescission or annulment shall affect any subsequent Event of Default
or impair any right consequent thereon.


 




    	 	18	 



     


    

 


c)       Subordination.
Holder agrees and acknowledges that this Note is subordinate to the obligation of the Company to the Senior Lender. The Holder
hereby agrees, upon the request of the Senior Lender at any time and from time to time, to execute such other documents or instruments
as may be reasonably requested by the Senior Lender further to evidence of public record or otherwise the priority of the Senior
Lender as contemplated hereby.


 


Section 9.         Miscellaneous.


 


a)       Notices.
Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation,
any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight
courier service, addressed to the Company, at the address set forth above, or such other facsimile number or address as the Company
may specify for such purposes by notice to the Holder delivered in accordance with this Section 9(a). Any and all notices or other
communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile,
or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or address of the
Holder appearing on the books of the Company, or if no such facsimile number or address appears on the books of the Company, at
the principal place of business of such Holder, as set forth in the Purchase Agreement. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York
City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by
U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to
be given.


 


b)      Absolute
Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this
Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the
Company. This Note ranks pari passu with all other Notes now or hereafter issued under the terms set forth herein.


 


c)       Lost
or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange
and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed
Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence
of such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to the Company.


 




    	 	19	 



     


    

 


d)       Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by
and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict
of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions
contemplated by the Notes (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders,
employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the
“New York Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York
Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Notes), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or
such New York Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service
of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered
or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. Each party
hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Note or the transactions contemplated hereby. If any party shall commence an
action or proceeding to enforce any provisions of this Note, then the prevailing party in such action or proceeding shall be reimbursed
by the other party for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution
of such action or proceeding.


 


e)       Amendments,
Waivers. No provision of the Notes may be waived, modified, supplemented or amended except in a written instrument signed by
the Company and Required Holders, which upon execution of such written instrument shall be effective as to all Notes then outstanding.
Any waiver by the Company or the Required Holders of a breach of any provision of the Notes shall not operate as or be construed
to be a waiver of any other breach of such provision or of any breach of any other provision of the Notes. The failure of the Company
or the Required Holders to insist upon strict adherence to any term of the Note on one or more occasions shall not be considered
a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of the Notes
on any other occasion. Any waiver by the Company or the Required Holders must be in writing.


 




    	 	20	 



     


    

 


f)       Severability.
If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances.
If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury,
the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under
applicable law. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would
prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Note as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, and
the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants
that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but
will suffer and permit the execution of every such as though no such law has been enacted.


 


g)       Next
Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.


 


h)       Headings.
The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit
or affect any of the provisions hereof.


 


*********************


 


(Signature Pages Follow)


 




    	 	21	 



     


    

 


IN WITNESS WHEREOF, the
Company has caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.


 


 


	 	Intellinetics, inc.
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:
	 	 	 
	 	Facsimile No. for delivery of Notices:___________________


 




    	 	22	 



     


    

 


ANNEX A


 


NOTICE OF CONVERSION


 





To be delivered to:


 


Intellinetics, Inc.


2190 Dividend Drive


Columbus, OH 43228


Attn:


Facsimile Number:


 


The undersigned hereby
elects to convert principal under the 12% Subordinated Convertible Note due ___, 2018 of Intellinetics, Inc., a Nevada corporation
(the “Company”), into shares of common stock (the “Common Stock”), of the Company according
to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such
certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder
for any conversion, except for such transfer taxes, if any.


 


By the delivery of this
Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common Stock does not exceed
the amounts specified under Section 4 of this Note, as determined in accordance with Section 13(d) of the Exchange Act.


 


The undersigned agrees
to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the
aforesaid shares of Common Stock.


 


Conversion calculations:


Date to Effect Conversion:


 


Principal Amount of Note to be Converted:


 





Signature:


 


Name:


 


Address for Delivery of
Common Stock Certificates:


 


Or


 


DWAC Instructions:


 


Broker No:______________


Account No:_____________


 




    	 	23	 



     


    

 


Schedule 1


 


CONVERSION SCHEDULE


 


The 12% Subordinated Convertible Notes due
on _____, 2018 in the aggregate principal amount of $____________ are issued by Intellinetics, Inc., a Nevada corporation. This
Conversion Schedule reflects conversions made under Section 4 of the above referenced Note.


 


Dated:


 


	Date of Conversion

(or for first entry, 

Original Issue Date)	 	Amount of 

Conversion	 	Aggregate 

Principal 

Amount 

Remaining 

Subsequent to 

Conversion

(or original 

Principal 

Amount)	 	Company Attest
	 	 	 	 	 	 	 
		 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 


 




    	 	24